TL;DR: Octopus Energy Spins Off Kraken for Growth & Clean Energy Focus
Octopus Energy is spinning off Kraken, its AI-driven tech arm, valued at $8.65 billion, to strategically scale. This move allows Kraken to independently expand as a global energy tech leader managing 70+ million customer accounts, while Octopus Energy reinvests $320 million into clean tech ventures like solar, EVs, and heat pumps.
• Entrepreneurs can learn from this timing and diversification strategy.
• Kraken attracts high-profile investors like D1 Capital and Fidelity International, ensuring resources for ambitious growth.
• Octopus Energy retains minority ownership to sustain collaboration.
Key takeaway: Scaling sometimes means letting go, focus on strengths and divest strategically. For more scalability strategies, check out Fe/male Switch for tailored entrepreneurship programs.
Octopus Energy has made a groundbreaking move in the energy sector by announcing the spin-off of its technological arm, Kraken, at an impressive valuation of $8.65 billion. As an entrepreneur heavily involved in tech and education, I can’t help but analyze this through the lens of business scalability and strategic innovation. Here’s why this announcement matters so much and what experts, especially startup founders, can learn from it.
What Is Kraken and Why Its Spin-Off Is Huge?
Kraken isn’t just a random software subsidiary, it’s the backbone of Octopus Energy’s success. With its AI-driven platform, Kraken helps utilities automate customer service, efficiently manage billing, and optimize when customers use energy. What sets it apart is its service reach; it operates for over 70 million customer accounts globally, including players like EDF, National Grid US, and Tokyo Gas.
For Octopus Energy, spinning off Kraken means focusing sharply on its core clean energy mission while allowing Kraken to grow independently as a tech powerhouse. Founders, take note: sometimes the key to scaling a business isn’t holding onto everything, it’s knowing when to divest and double down.
Why Mid-2026 Is the Perfect Timeline
The planned demerger aligns with Kraken’s monumental first standalone investment round, raising $1 billion, led by notable players like D1 Capital Partners and Fidelity International. Timing the separation for mid-2026 gives Octopus and Kraken just enough runway to fine-tune governance, leadership, and operational independence without rushing into an IPO prematurely. Entrepreneurs, learn this crucial tactic: strategic timing can be the difference between a misstep and a market-changing innovation.
Which Investors Are Betting Big?
The funding round wasn’t just impressive; it was strategic. Included in Kraken’s investor roster are the Ontario Teachers’ Pension Plan, Durable Capital Partners, and Origin Energy. Not only are these big names injecting financial power, but their presence signals trust in Kraken’s long-term vision as a leader in energy technology. It shows smart founders shouldn’t chase any funding but prioritize finding the right backers who align with their mission.
- D1 Capital Partners: U.S.-based and known for backing disruptive late-stage startups.
- Origin Energy: Still holds a 22.7% stake in Kraken, ensuring ongoing collaborations.
- Fidelity International: Experts in managing long-term investments for growth-phase companies.
How Does Octopus Energy Benefit From This Move?
While Octopus Energy will retain a 13.7% stake, enabling Kraken to operate independently allows them to distribute attention across other growth areas. With $320 million injected directly into its clean energy ventures, Octopus is doubling down on its retail operations, clean tech like solar and heat pumps, and EV leasing services. Essentially, they’re banking on innovation and market expansion as a vertically integrated energy player. Founders should note the importance of honing in on high-margin activities while strategically carving out other parts of their business.
Lessons Startups Can Learn From Octopus and Kraken
- Strategic focus beats trying to do it all: Octopus knows its strengths and therefore can exit tech management while maximizing energy innovation.
- Partner strategically: Kraken’s onboard utilities like EDF aren’t just clients; they’re strategic collaborators in reducing peak energy costs globally.
- Diversify funding: Beyond securing existing investors, Octopus has embraced global financial players to maximize leverage.
How Entrepreneurs Can Use This Strategy
As a founding entrepreneur myself, I believe in the power of well-timed demergers and clearly defined missions. I’ve created startups that blend education with technology, and I’ve learned that scaling requires more than just ambition, it requires a strategy that’s both lean and effective. Here’s how you can apply Octopus Energy’s playbook to your own ventures:
- Set timelines for pivoting independent operations (e.g., scaling one product line while repositioning another).
- Invest in technology that isn’t just functional but transformational, AI and automation are game changers.
- Collaborate with domain leaders rather than trying to compete with them.
- Always secure the right investors who align with your roadmap rather than chasing valuation.
Potential Risks Octopus Energy May Encounter
This move isn’t risk-free. Octopus Energy is betting on Kraken’s ability to grow independently while hosting its future as a neutral-operating system. Challenges could include:
- Market volatility: Energy SaaS is a strong niche, but changes in global politics might affect energy demand.
- Leadership adaptation: Kraken’s new governance setup must lend itself to agility.
- IPO risks: Kraken’s anticipated public offering could reclaim its value, but only if timed perfectly.
Conclusion: Scaling Through Independence
As entrepreneurs, we’re constantly balancing the question of independence versus integration. Octopus Energy’s choice to spin Kraken off while leveraging its investment power is a masterclass in strategic decision-making. Startups don’t need to own everything; sometimes, creating standalone successes ensures scalability and growth in ways that legacy models can’t compete with.
I challenge you, founders, creators, and innovators, to assess your own ventures. What’s ready to grow beyond your control? What part of your business should you not hold onto? Trust me: sometimes scaling up means letting go.
If you’re looking to expand your knowledge on startup scalability, check out resources like Fe/male Switch for mentorship, group discussions, and tailored founder education programs.
FAQ on Octopus Energy and Kraken Spin-Off
What is Kraken Technologies, and why is its spin-off significant?
Kraken Technologies, a subsidiary of Octopus Energy, is an advanced AI-driven platform designed for utilities. It automates customer service, billing, and optimizes energy consumption globally, currently servicing over 70 million customer accounts. The spin-off of Kraken is significant because it positions Kraken as a standalone entity valued at $8.65 billion. This step allows Octopus Energy to focus on its clean energy mission while enabling Kraken to grow as a tech industry powerhouse. Such a strategic move highlights the importance of scalability and independence in the tech sector. Learn more about the announcement on OilPrice
Which investors are funding Kraken’s expansion?
Major investors in Kraken include industry leaders like D1 Capital Partners, Fidelity International, Ontario Teachers' Pension Plan, and Durable Capital Partners. Origin Energy also retains a 22.7% stake, enabling ongoing collaboration. This strategic funding aligns with Kraken’s goal to expand its technology as a scalable platform for energy SaaS globally. The involvement of such prominent investors reflects trust in Kraken’s ability to innovate and lead in its sector. Discover more about Kraken's investor lineup on Proactive Investors
How does Octopus Energy benefit from the Kraken spin-off?
Octopus Energy retains a 13.7% stake in Kraken while redirecting $320 million from this separation into clean energy innovation projects. This allows Octopus to concentrate on its core ventures such as solar technology, heat pumps, EV leasing, and retail operation expansion. By doing so, Octopus maximizes its ability to scale vertically in its clean energy markets while enabling Kraken to thrive independently. This strategic focus underlines the importance of divesting non-core operations for business growth. Explore Octopus’s clean tech plans on Yahoo Finance
Why is mid-2026 a strategic timeline for Kraken’s spin-off?
The mid-2026 timeline aligns with Kraken’s first standalone $1 billion investment round, ensuring adequate time to establish independent governance and leadership. This deliberate timing avoids rushed transitions and prepares Kraken for potential IPO opportunities in the following years. Entrepreneurs exploring similar business transitions can learn about the importance of thoughtful timing for successful scalability. Check out insights on Kraken’s timeline on Ground News
Will Kraken look to go public after the spin-off?
Yes, Kraken has hinted at a potential IPO within 1-2 years following its formal independence. The public listing could occur in either London or New York, depending on market conditions and strategic positioning. A successful IPO would further bolster Kraken’s global reach, marking it as a key player in energy software solutions. Entrepreneurs looking at IPOs can note the importance of robust governance before going public. Read more about Kraken’s IPO plans on BBC
What challenges might Octopus Energy face following this demerger?
While the demerger is strategic, risks include potential market volatility affecting Kraken’s valuation and the broader energy tech sector. Additionally, balancing governance during Kraken’s transition to independence and timing the IPO could present hurdles. However, Octopus’s commitment to innovation and investment in clean energy ventures positions it to combat these challenges effectively.
How will Kraken’s spin-off transform the energy SaaS landscape?
Kraken’s growth as an independent entity highlights the increasing importance of energy SaaS models globally. By enabling utilities to optimize energy use and integrate renewable solutions, Kraken sets a new benchmark in smart grid management. Other utilities may follow similar paths of spinning off their tech divisions, further digitizing the industry.
What can startup founders learn from Octopus Energy’s strategic moves?
Startup founders can take away key lessons including the importance of focusing on core strengths while divesting non-essential operations for growth. Octopus Energy’s decision showcases the value of strategic timing, investor alignment, and vertical integration in thriving sectors. Learning from this example can help founders reimagine scaling their own ventures effectively.
Is Kraken positioned for future partnerships and global expansion?
Yes, Kraken already collaborates with leading utilities like EDF and Tokyo Gas, making it globally recognized as a leader in energy management software. With its scalability and AI capabilities, Kraken is poised to attract additional partnerships, revolutionizing how energy systems operate globally.
Are there any resources for startup founders to explore scalability strategies?
Startup founders interested in scalability strategies can benefit from platforms like Fe/male Switch, which offers mentorship, group discussions, and tailored education programs for entrepreneurs. Explore Fe/male Switch resources
About the Author
Violetta Bonenkamp, also known as MeanCEO, is an experienced startup founder with an impressive educational background including an MBA and four other higher education degrees. She has over 20 years of work experience across multiple countries, including 5 years as a solopreneur and serial entrepreneur. Throughout her startup experience she has applied for multiple startup grants at the EU level, in the Netherlands and Malta, and her startups received quite a few of those. She’s been living, studying and working in many countries around the globe and her extensive multicultural experience has influenced her immensely.
Violetta is a true multiple specialist who has built expertise in Linguistics, Education, Business Management, Blockchain, Entrepreneurship, Intellectual Property, Game Design, AI, SEO, Digital Marketing, cyber security and zero code automations. Her extensive educational journey includes a Master of Arts in Linguistics and Education, an Advanced Master in Linguistics from Belgium (2006-2007), an MBA from Blekinge Institute of Technology in Sweden (2006-2008), and an Erasmus Mundus joint program European Master of Higher Education from universities in Norway, Finland, and Portugal (2009).
She is the founder of Fe/male Switch, a startup game that encourages women to enter STEM fields, and also leads CADChain, and multiple other projects like the Directory of 1,000 Startup Cities with a proprietary MeanCEO Index that ranks cities for female entrepreneurs. Violetta created the “gamepreneurship” methodology, which forms the scientific basis of her startup game. She also builds a lot of SEO tools for startups. Her achievements include being named one of the top 100 women in Europe by EU Startups in 2022 and being nominated for Impact Person of the year at the Dutch Blockchain Week. She is an author with Sifted and a speaker at different Universities. Recently she published a book on Startup Idea Validation the right way: from zero to first customers and beyond, launched a Directory of 1,500+ websites for startups to list themselves in order to gain traction and build backlinks and is building MELA AI to help local restaurants in Malta get more visibility online.
For the past several years Violetta has been living between the Netherlands and Malta, while also regularly traveling to different destinations around the globe, usually due to her entrepreneurial activities. This has led her to start writing about different locations and amenities from the point of view of an entrepreneur. Here’s her recent article about the best hotels in Italy to work from.